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The Upcoming NLTP: trying and failing to put lipstick on a pig

By Peter M, on June 3rd, 2012

There will be a lot of discussion over the coming weeks and months about transport funding – how much is going to be spent on what types of transport projects over the next three years. This is because NZTA’s “National Land Transport Programme” (NLTP) is in the final phases of being put together, and it is the NLTP which guides how NZTA spends your petrol tax and road user charges over the next three years. The NLTP is a very important document for listing all the projects that they will, and won’t, help fund between now and 2015. But it’s not really a political document in the same way that the Government Policy Statement and the Auckland Plan are – rather something that focuses much more on the details of what does and doesn’t happen within the funding constraints already set by central government.

It seems likely that much of the debate around the NLTP will be based around a few key issues:

is enough money being set aside to maintain and renew our current state highway and local roading network?

how much of the “new state highways” budget will be eaten up by the various Roads of National Significance (RoNS) and how much will be left for smaller, generally more cost-effective, projects?

what is the actual increase in funding for public transport services and where’s that money going?

Greater efficiencies will be required because in many cases the allocations for road maintenance and renewals will not keep up with inflation and growing networks in some regions, and may therefore be reductions in real terms.

This investment will achieve the highest possible return for New Zealand road users if road controlling authorities continue to set clear priorities across their networks…

…The Road Maintenance Task Force will complete its work mid-year. It is expected to identify opportunities for longer term efficiency solutions. We’re looking for a step change in the approach to maintaining networks to deliver a long-term benefit.

It’s about learning from others who are doing it well, and thinking about maintenance costs when scoping out project affordability.

We have targeted renewals to roads with heavy dairy, forestry and delivery freight. This is in response to some industries who told us that they could grow faster if we invest even more money into the routes they need to get their product to market.

I do get a bit worried when the funding of looking after our existing roading network, what arguably should come before pretty much anything else, has to rely upon yet to be identified efficiencies to ensure our roads don’t fall to pieces. Also, bits of ‘bureaucratise’ like the better targeting of network levels of service sounds like ‘pointy-head-speak’ for allowing parts of the network to fall into disrepair. I sincerely hope we don’t fall into the trap the USA finds itself in, where politics leads to new roads being opened so ribbons can be cut in front of cameras, while behind the scenes the existing infrastructure crumbles into complete disrepair.

The document also provides some further detail on the public transport funding numbers that we saw reported so inaccurately the other day. It would seem as though Lane Nichols, writer of the original Stuff article, didn’t get past NZTA’s heading of “Huge Increase in Public Transport Funding”. If you do get past that headline and dig into what’s actually happening to PT funding, it’s a little bit more complicated:

At a minimum, investment in all public transport networks is being maintained at current levels. Funding is being boosted to cover increased rail charges in Wellington and Auckland, and all other funding increases are targeted at peak services that help to relieve severe congestion.

A significant increase in funding for passenger rail operator services will improve the reliability and punctuality of commuter rail in Auckland and Wellington.

Much of this increase is for existing additional commitments, including running costs associated with the Auckland integrated fares system, rail operationalised rolling stock costs and rail track access charges.

So once we dig a bit deeper we find out some real truths. Firstly, that basic PT funding is being held at current levels. Secondly, that most of the increase in funding for PT services is actually going into increased track access fees (which is just a giant money-go-round back to KiwiRail) or into paying off Auckland’s electric trains (another giant money-go-round back to the government). Thirdly, we find out that all non-rail increase in PT service funding is being targeted at providing more services on the road at peak times – even though we know providing peak services are extremely expensive (you gotta buy that extra bus or train), whereas it would actually be way smarter to provide better off-peak services to encourage more people to travel outside the peak periods and make better use of existing resources. My word NZTA are stupid at times.

The whole “PT funding is increasingly hugely” looks like a misleading lie in the end, with pretty much all the “extra” money finding its way back to the government – either through increased KiwiRail track-access fees or through repayments for the electric trains the government takes credit as supposedly having funded (even though they’re actually making a profit off the repayments).

At the end of the day it’s a bit unfair to blame NZTA for too much more than trying (and I think failing) to put lipstick on a pig when it comes to the two key issues in this NLTP: insufficient funding to look after the current network and insufficient funding to respond to growing public transport usage (especially in terms of PT infrastructure funding). These big decisions were made by the government almost a year ago in the Government Policy Statement, and it’ll probably take a change of government to fix them. In essence, everything is being squeezed to build the Roads of National Significance – kind of weird when so many of them don’t make economic sense.

26 comments to The Upcoming NLTP: trying and failing to put lipstick on a pig

A. They are not dumb, and know that the RoNS programme is batshit crazy, and that every other priority is being distorted because of it;

or

B. NZTA truly are as dumb as they appear.

Either way they don’t deserve much sympathy.

And if A is true, then they should be cultivating powerful allies in Treasury to derail (ahem) RoNS as a poor way to spend money. When school class sizes are to be increased to save a measly $43m it seems somewhat deranged to be planning on spending 50 times that sort of money on ineffective motorways to Northland. They should speak out, not be lipsticking pigs.

What I want to know is what backhanders are happening behind the scenes so that roadbuilding will happen regardless – are construction companies really the governing party’s biggest donors by the kind of margin that this huge preferential treatment suggests?

I am sure NZTA are happy to support and deliver whatever the the government wants to build, whether it is roads or rail, if it means 14 billion dollars worth of spending. They must be loving the growth in their department and sector. I can’t see TA bosses going to treasury and saying we shouldn’t be spending so much on new roads, lets do some rail investment (sadly for our country). I just hope the government isn’t able to fully tie up the whole 14 bill in signed contracts before we get the chance to turf them out in another, very long, two years.
Also, if the gov really want to improve the trade balance, how about looking at the 8 bill spent on oil imports compared to 6 bill a few years ago. The IMF expect oil to double in price over the next ten years. God I hate politicians!

Actually I suspect that a lot of NZTA staff are not very happy that they have to go to their local communities and other stakeholders and say things like “sorry, we don’t have enough money for your road safety and travel behaviour initiatives, road maintenance, and walk/cycle projects. Oh and we’re also looking to cut back on transportation education/training and research, and we’d like to charge you more for access to the Crash Analysis System.” Basically a lot of quite important things (some of which barely rate within the margins of error in the overall NLTP) are being penny-pinched for the sake of an extra few $million here and there for RoNS…

We have targeted renewals to roads with heavy dairy, forestry and delivery freight. This is in response to some industries who told us that they could grow faster if we invest even more money into the routes they need to get their product to market.

Hopefully we get to analyse this a bit more. I’d like specific examples of the routes, the products and the work required. “Some industries” won’t grow any faster if their product is delivered a few minutes quicker by road, given a supply chain which includes sea freight. So it must be a capacity issue being referred to here.

My concern is that this is a smokescreen for road reinforcements to support 53 tonne trucks.

Yes this is an example of a reasonably plausible claim being used to justify what they want to anyway. Also this is state welfare for certain players, there needs to be debate around value for the whole nation when taxpayer dollars are being given at such high volumes to support individual businesses.

Seems to me that this is a classic example of where user pays is not being applied.
Basically, over tonnage trucks are not paying the full cost of the current damage they are causing now (they’d have to be paying at least 10,000-15,000 times the RUC charges that 1 car user who pays RUC charges pays – for each and every KM – to cover that cost).

And they’re saying we need more routes so we can run even more trucks.
This smells of special pleading along the lines of “ignore the costs and smell the benefits”.

At the very best, over weight trucks like the 53 tonne leviathons now permitted, only replace .33 of a normal 40 tonner, so why spend two or three times the money to allow some (and only some) truck operators to run the same freight around the place – except with less drivers.

We already have a high tonneage transport system, its called a Railway. Yes it doesn’t go everywhere that trucks could.
But as you point out – how come its now a critical growth factor to selling commodity products to be able to deliver these loads by road marginally quicker, when even the closest destination for those goods is days away by sea with all the mucking about in ports and added costs at each end. And eveyr port in NZ has a railway at its front door, there is no reason not to use railways for high volume/tonneage transport.

My final point for the NZTA and the road freight lobby wanting to deliver their “products” quicker –
NZTA needs to tell these guys “if you want it so badly, you pay for it – like every one else does now under user pays”.

Patrick:
Agree a larger conversation needs to be had on the relative merits of giving special aid/advantages to certain business and industries over others.
It all sounds like the RoNS all over again.

This is absolutely on the money. I couldn’t agree more. Where are the checks and balances in our system? for example the opposing political parties and the media who are supposed to question policies. It shouldn’t just be a group of individuals on a blog site discussing these things!

There is no 53 tonne limit – there are already 62 tonne vehicles on our public roads with plans for 70 tonnes. The obfuscation around this legislation was epic and most of the public (and opposition politicians) was asleep at the wheel. Local authorities are under pressure to permit these vehicles on local roads with (presumably) ratepayers picking up the tab. Where is the accountability? Prior to the mayoral election I wrote to both Banks and Brown asking what their policy would be regarding allowing HPMVs (sic) on local roads. Neither of them bothered to reply. Time for ratepayers to raise it as an issue (although I suspect it is too late).

My take is that RONS are primarily for the benefit of the trucking industry. We pay to increase their “productivity” and our rail system withers and dies.

Where are your opposition politicians in all of this. It would seem to me that they should be calling this planned expenditure for what it is. They need to be vocal now or you will not get the much wished for government change in 2 years time. You will get more of the same because joe public will still not see how useless and biassed the current government is. As for expenditure on more peak hour busses I say let it happen. It will help choke Auckland city even more and help to demonstrate the need for the CRL and that there is only a finite number of busses that the streets can handle. As for off peak, has anyone suggested a shoulder time either side of peak with a service pattern between peak and off peak frequencies. This should encourage a spread of the peaks. As for off peak it is a no brainer. The busses are sitting around doing nothing then. One only needs to cover the cost of the driver. Oh I did say it is a no brainer. That must explain it.

Both major opposition parties are being pretty vocal and have good, and in the current context, radical plans for transformation of both how the Ministry and NZTA operate. If we can get them together over the line in 2014, which is a quite realistic expectation, it will be like night and day from the current insanity. How able the officials will be to cope with this is another issue….. I suspect that the desire to keep their secure taxpayer funded jobs will concentrate their minds wonderfully. A lot of engineers discovering that they’ve always wanted to things differently is what I’m expecting. First though we’ve got to get that Lab/Grn gov….

On tonights One News poll results the Government wouldn’t have an absolute majority if the election was held tomorrow, even if United Future and ACT got a seat each (v. doubtful for that result on current form), and even with NZ First not over 5% and thus with no seats, Labour & Greens are upticking so they and the others could just about get there, if Peters got only 1 seat then the cats in the pigeons.

Don’t need to worry too much about more routes being approved for heavier trucks, as the NZTA can’t afford to upgrade the bridges on proposed routes. Ironic that the RONS is getting the money needed to create productivty gains through heavier vehicles.

cmo,
Its good NZTA is not paying for route upgrades for heavier trucks as the only road users that benefit from such upgrades are the over 40 tonne trucks – no one else gets any benefit from those upgrades.

And as I and others on this blog have said before these trucks should be paying the full costs for the road damage they (and all other trucks) cause to the roads in comparison to the RUC/fuel charges they pay (which is not much higher as a proportion than the same a light diesel vehicle pays – even allowing for the higher tonnage. If they did then NZTA wouldn’t have to chose between prioritisation of maintenance on to high priority roads as they say they need to.

As for the “NZTA can’t pay for RoNS”, thats not news, the Govt knows this, has been told this time and time again, yet persists.
It was good to hear Green Party co-leader Rusell Norman say on the “The Nation” on TV3 Saturday, that canning the RoNS would solve a lot of the current financial pressures the Governments books have. [Russell actually said “we [the Green Party] would balance the books by not building 14 billion worth of motorways”.
Way to go Russell.

Of course, the interviewer didn’t pick up on it, though a good one (like Duncan Garner) would have picked up on it.

If people want to go back to an age where we have dirt roads and the horse and cart and we want to persist with the idea that if you take a square wheel and run it fast enough it will get you there, then you’d follow [the Green’s] policy.

* The critical value in setting road user charges is the weight at the individual axle. For a given number of axles, the increase in overall mass of 20 percent should lead to a doubling in the actual road user charge per km. The question I have is whether the additional revenues would match the additional costs incurred, and Murphy’s Law being what it is I suspect not.

* The last time this idea was being seriously looked at, I had people in the roading industry telling me that they saw major ‘productivity gains’ from being able to carry heavier loads (over one vehicle, presumably, not two).

* At this time, I was also working for Tranzrail, and the prospect of heavier truck mass limits was seen as a disaster; because the proportion of railway traffic that could now be lost to the trucking industry was substantial, and this was allowing for the fact that Tranz Rail had a reasonably successful trucking arm (second-largest truck company in the country, at the time).

* When I worked for what was then known as Transit New Zealand, maintenance of the existing road asset took precedence over renewal of existing assets, and that took precedence over building new assets. Seeing this policy abandoned must be quite galling to many of my former colleagues.

* A factor in local road funding is that NZTA funding is designed to match local contributions, and these are under pressure anyway. It has never been consistent policy to up the central government contribution to the local roads network if the local share can’t be met.

* It seems that the Government wants the additional PT services which are now needed, to be paid for by the users themselves through higher fares.

Ross just on your second to last point, we are now hearing of regional councils sitting on money in their road repair budgets because there is a decline in matching funds from NZTA. Ie they can’t spend their own money [well and not get the best value out of it] because they are not receiving as much from NZTA…. result roads not being maintained, or, like Kaipara council they are doing it anyway and 70% of their budget is going on roads. What the gov. wants….

That raises the question of why Auckland Council is issuing permits for so-called HPMVs. I have started to see them on our local roads. Greg Edmonds (in Auckland Transport’s April report) claims that one of the highlights is “significant progress on identifying HPMV routes for overweight road transport operations”. One of these routes for which there are 25 pending permit applications is the route to the Glenbrook steel mill for which there is a parallel railway.

Depending on where the loads are going, consider electrifying the line from Glenbrook Steel Mill through to Auckland Port? Kiwirail are upgrading all the bridges between Hamilton and Auckland so perhaps extending the NIMT electrification up to AKL could be worth it after all. What’s the story with some kind of electrical phase difference between the AKL suburban and NIMT systems? Can the two halves of this 25kVA pie not be made whole?

Diesel-hauled rail is around 4 times more fuel efficient than trucks so it doesn’t take electrification to achieve significant benefits in terms of emissions or specific fuel consumption. Making truck transport more expensive by making operators pay for all of the costs they impose would be far more cost effective than electrifying a section of railway. Instead truck transport is being made cheaper by externalising costs.

The critical value in setting road user charges is the weight at the individual axle. For a given number of axles, the increase in overall mass of 20 percent should lead to a doubling in the actual road user charge per km. The question I have is whether the additional revenues would match the additional costs incurred, and Murphy’s Law being what it is I suspect not.

The industry accepted figure (as per UK and AUS road authorities) for damage incurred by vehicle weight is that it goes up by 10 to the 4th power (thats 10,000 times more) of the axle weight.

On your comment of a 20% increase leading to a theoretical doubling of RUC charges, is going to way less than the actual cost of the damage wrought by a 20% heavier per-axle vehicle. Thus leading to the situation where the HPMV crowd are being cross subsidised by other road users, particularly cars.

There is also an argument that even today, regular trucks do not carry the full cost of the damage to the roads they cause.

In summary form, it seems that the combined RUC (assuming diesel vehicles) and fuel charges for 10,000 1 tonne cars, would be way, way more than the same RUC and fuel charges a HPMV truck would be being charged for the same distance. Yet in theory they amount of road damage caused by the cars is the same level as the HPMV.

Even if you compare like for like with diesel car versus diesel powered truck the truck are not paying their way now.

The last time this idea was being seriously looked at, I had people in the roading industry telling me that they saw major ‘productivity gains’ from being able to carry heavier loads (over one vehicle, presumably, not two).

I am sure that any truck operator with 2 25 tonne trucks being used to deliver 50 tonnes of freight will argue that 1 truck to do the same delivery (even with twice the RUC charges to do so) is way more efficient and leads to “significant productivity gains” for that delivery.

But if you stop looking at the best case scenario (two trucks replaced by one) and consider a “road train” of trucks delivering a stream of 53 tonne loads from A to B and compare it with the same stream of loads being delivered by 40 tonne trucks instead, then the advantage, is at best only 33% (at 13 tonnes “better” per trip for the HPMV option), meaning that for every 160 tonnes delivered, you only make 3 truck trips for the HPMV option compared to 4 trips for the 40 tonner option. Which is only 33% fewer trips.

If you assume the HPMV vehicles pay twice the RUC charges (a fairly low figure IMO as per above damage/cost estimates), then the only real savings are needing 25% less trucks (a capital cost) and 1 less driver for the same loads carried (a operational cost), less the double RUC charges (an operational cost).
So all in all I’d expect that the HPMV option would result in a operational cost neutral situation if like is compared with like, with the “productivity” gain coming from needing less trucks.

Even with all that notional advantage I believe that most if not all of the externalities of the HPMV option when these are paid for by RUC charges means that HPMV operators are not actually paying the true costs so they are in fact riding on the backs of every other road user to make their gains.
This is why they are making “productivity gains” not because the HPMV model is inherently more efficient as the numbers would suggest.

At this time, I was also working for Tranzrail, and the prospect of heavier truck mass limits was seen as a disaster; because the proportion of railway traffic that could now be lost to the trucking industry was substantial, and this was allowing for the fact that Tranz Rail had a reasonably successful trucking arm (second-largest truck company in the country, at the time).

Of course the Railways would be scared shitless.

That is because every transport mode switch introduces inefficiencies in the transport system.
switching loads from road to rail or v.v. or from rail/road to a ship adds cost and delays and causes congestion.

So of course, rail could never compete with point to point delivery offered by trucks and larger trucks means more freight per trip reducing the railways advantage even more.

And even if the railway went directly from A to B just like the trucks, there would be the issue of loading up the train, unloading at the other end which adds extra time delays even if the trains ran at the same speed as the trucks (which in NZ they cannot due to the rail gauge) that all means to total amount of freight units delivered per time/delivery run for a train can never practically match a fleet of trucks over the same distance and time.
When you add the 53 tonne HPMV to the equation and the railways job just got harder, even if they use the rail backbone for long haul and run their own 53 tonne HPMV fleet everywhere else.

Part of that problem is that even Railways needed fewer trucks with everything HPMV, they are worse off than the (HPMV) truck only guys, as the truck only operators don’t have a railway to maintain. They may be marginally better off than the truck only guys who don’t run HPMVs but thats not a fair comparison.

Another problem with trains is that using a stream of trucks to carry 40 foot containers means that the start and end of journey congestion factor is eliminated, as each truck is loaded (with one, maybe two containers) it can depart, and once it arrives at the destination the trucks can be unloaded one at a time and containers loaded onto the ship one at a time.

A train has to be bulk loaded, which means it takes hours to assemble a rail train before it can go. Trains have to be long to compensate for the load/unload times and get efficiencies, which leads to a diminishing returns situation where you have longer and longer trains to try and reduce the “per container” freight price. Once at the other end it has to unload – this can cause problems as having a 300 hundred container train arrives is a massive congestion issue that can take hours to then load into the ship even with multiple cranes to off load the train several at a time.

So yep, of course, the railways were worried.

And one major reason for all this HPMV stuff is that societies as a whole deem some things to be inappropriate for society as a whole even though they are good or efficient for the individual (medicinal use of marijuana is perhaps one example of this but there are many others). Kind of the needs ot many outweighing the needs of the one.

In transport, there is no longer any policy that says this or that is a “public good” or “a desirable outcome to society” anymore and public benefits (public goods) such as: reduced use of oil, better terms of trade, less road traffic/congestion or safer roads due to less HPMV trucks are overridden for the benefit of a few such as faster deliveries or “more efficient” use of trucks.

So we end up with the “local maxima” (trucks used for long haul freight over trains) being allowed to become the general maxima (HPMV being a recent such an example).

Actually, there’s another factor in this, which I think has been raised before:

* Road strengthening follows a seventh-power rule, I gather – a ten percent increase in pavement thickness will more or less double the pavement strength (1.1^7 =1.95).

* This means that if you do have heavier loads, urban area roads are already built to cope, more or less – it is the rural roads which will show the effects of the loads. So, a given movement on a lightly-built road will require much more in the way of remedial maintenance that the same movement on a state highway or urban road. This has certainly been seen in Australia IIRC. However, these factors are lost in the average-cost approach we have for highways pricing.

So: your argument for the negative externalities of heavier trucks on the roads is the stronger one, especially with respect to the rail network. The RUC model is not designed around accounting for externalities. Rail’s problem is that it bears a very large fixed cost in terms of network maintenance, whereas roading operators are much less affected; as their RUCs (=track access charges) are about ten percent of the cost of a truck operation.